Quilvest Real Estate, the real estate arm of Luxembourg-based private equity firm Quilvest, has made a high street-based shopping center near Cologne its first real estate investment in the retail sector.
Quilvest purchased the Rheinberg Passage shopping center for around €30 million in a joint venture with Greenman Investment, the Dublin-based real estate investment firm.
The 100,000 square foot shopping center is located in Bergisch Gladbach, near Cologne, in the North Rhine-Westphalia region – one of Germany’s most affluent areas.
Quilvest, which has previously acquired industrial and office properties in Europe, said the asset will be acquired using capital from three sources: its dedicated real estate fund, one of its institutional investors and several of Quilvest’s other investors.
Greenman, which specializes in retail asset management, said it was planning to renovate the asset, reorganize its layout, improve its tenant mix and overhaul its food and beverage offering.
Marc Manasterski, global head of real estate at Quilvest, said the partnership had seen an opportunity in the value-add space over the next three to five years because of the low interest rate environment in Europe at present.
Manasterski said its return expectations for the transaction placed the deal in value-add territory and it hoped for returns of around 10 percent to 14 percent.
The seller was MEAG, the asset management business of Munich RE, one of the world’s largest insurance companies.
The transaction means that Quilvest has completed more than €100 million of deals in the German market over the past 18 months via three purchases, including the Cologne asset and further deals for office assets in the German cities of Frankfurt and Mainz.
“The RheinBerg Passage fits our investment strategy as the asset possesses strong fundamentals, such as its high street location and strong catchment area, with Bergisch Gladbach residents demonstrating higher than average purchasing power,” said Manasterski. “It also has great potential for development, by creating greater variety within the tenant structure and improving the internal layout.”
“The new concept for the RheinBerg Passage scheme focuses primarily on food retailing. From our point of view, this would match the growing demand for a wider variety of groceries in shopping centers,” said John Wilkinson, chief executive officer at Greenman.
PERE understands that Quilvest has a number of further deals in its investment pipeline, including office assets in Spain.